1 National Surface Transportation Infrastructure Financing Commission, Final Report, Paying Our Way: A New Framework for Transportation Finance, February 2009, 50-51, http://financecommission.dot.gov/Documents/NSTIF_Commission_Final_Report_Advance%20Copy_Feb09.pdf (accessed March 2, 2009).
2 Pennsylvania Transportation Partners Web site, http://www.penntransportation.com/?sectionid=24 (accessed September 30, 2008).
3 National Surface Transportation Infrastructure Financing Commission, Final Report, Paying Our Way: A New Framework for Transportation Finance, February 2009, http://financecommission.dot.gov/Documents/NSTIF_Commission_Final_Report_Advance%20Copy_Feb09.pdf (accessed March 2, 2009); Jonathan D. Miller, Infrastructure 2007: A Global Perspective, Urban Land Institute and Ernst & Young, 2007; David Schrank and Tim Lomax, The 2007 Urban Mobility Report, Texas Transportation Institute, September 2007; and Brad Shannon, Chris Clough and Shawna Rorem, "Transportation Woes Keep Recovery Elusive: Outdated system adds to costs of doing business," The Olympian, January 6, 2003.
4 National Surface Transportation Infrastructure Financing Commission, Interim Report, The Path Forward: Finding and Financing Our Surface Transportation System, February 2008, 18, http://financecommission.dot.gov/Documents/Interim%20Report%20-%20The%20Path%20Forward.pdf (accessed March 6, 2009).
5 Intergovernmental Forum on Transportation Finance, Financing Transportation in the 21st Century: An Intergovernmental Perspective, January 2008, 15.
6 National Surface Transportation Infrastructure Financing Commission, Final Report, Paying Our Way: A New Framework for Transportation Finance, February 2009, 36-37 and 64-97, http://financecommission.dot.gov/Documents/NSTIF_Commission_Final_Report_Advance%20Copy_Feb09.pdf (accessed March 2, 2009).
7 PCS interview with C. Kenneth Orski, transportation funding expert and author of Innovation Briefs, November 18, 2008.
8 National Surface Transportation Infrastructure Financing Commission, Final Report, Paying Our Way: A New Framework for Transportation Finance, February 2009, 50-51 http://financecommission.dot.gov/Documents/NSTIF_Commission_Final_Report_Advance%20Copy_Feb09.pdf (accessed March 2, 2009). For a more extensive funding discussion, see 49-55.
9 C. Kenneth Orski, "Thinking Beyond the Gas Tax," Innovation News Brief, No. 20, October 10, 2008. Proponents of such concessions, such as the Reason Foundation, a free-market think tank that publishes "Privatization Watch," claim that private companies can deliver and manage high-quality infrastructure as efficiently and effectively as government, at less cost. For an example, see Robert W. Poole, Jr., and Peter Samuel, "Pennsylvania Turnpike Alternatives: A Review and Critique of the Democratic Caucus Study," Reason Foundation Policy Brief No. 70, April 2008.
10 Kearsarge Global Advisors, Benefits of Private Investment in Infrastructure, January 2009, 6, http://www.kga-dc.com/images/benefits_of_private_investment_in_infrastructure.pdf (accessed January 22, 2009).
11 William D. Eggers and Tom Startup, Closing the Infrastructure Gap: The Role of Public-Private Partnerships, Deloitte Research, 2006, 23, http://www.deloitte.com/dtt/cda/doc/content/us_ps_ClosingInfrastructureGap2006(1).pdf (accessed February 18, 2009).
12 PCS interview with Stephen Goldsmith, director of the Ash Institute of Government at Harvard University, November 25, 2008; Jeffrey N. Buxbaum and Iris N. Ortiz, Protecting the Public Interest: The Role of Long-Term Concession Agreements for Providing Transportation Infrastructure, USC Keston Institute for Public Finance and Infrastructure Policy, 2007.
13 Florida Department of Transportation Web site, "FDOT Postpones the Alligator Alley Bid Submission Date," http://www.dot.state.fl.us/publicinformationoffice/moreDOT/spenews/alligatoralleybid.shtm (accessed February 18, 2009); Missouri Department of Transportation Web site, www.modot.org/safeandsound (accessed February 10, 2009).
14 PCS interview with John Flaherty, principal at the Carlyle Group for infrastructure, December 8, 2008.
15 Governor Edward Rendell press release,"Transportation Funding and Reform Commission Proposes Solutions to Address State's Critical Needs for Highways, Bridges and Public Transit," November 13, 2006, http://www.state.pa.us/papower/cwp/view.asp?A=11&Q=458013 (accessed February 18, 2009).
16 Grading the States 2008, Pew Center on the States, March 2008, http://www.pewcenteronthestates.org/topic_category.aspx?category=520 (accessed February 18, 2009).
17 PCS interview with Craig Shuey, executive director of the Pennsylvania state Senate Transportation Committee, January 21, 2009.
18 Ibid.
19 Roy Kienitz, deputy chief of staff to Governor Edward Rendell, testimony before the Pennsylvania House Transportation Committee, June 26, 2008. In early March 2009, Kienitz was nominated by President Obama to serve as undersecretary of tranportation for policy in the U.S. Department of Transportation.
20 PCS interview with Shuey, January 21, 2009.
21 PCS interview with Pennsylvania state Representative Joe Markosek, co-chair of the House Transportation Committee, July 26, 2008.
22 PCS interview with Shuey, January 21, 2009.
23 Pennsylvania Turnpike Web site, http://www.paturnpike.com/i80/news/nr092607.htm (accessed February 18, 2009).
24 PCS interview with Representative Jeff Pyle, January 15, 2009; House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
25 Ibid.
26 PCS interview with Shuey, January 21, 2009; House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
27 PCS interviews with Pennsylvania state Representative Kate Harper, January 20, 2009 and Shuey, January 21, 2009; House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
28 PCS interview with Shuey, January 21, 2009.
29 Ibid.
30 PCS interview with Kienitz, December 9, 2008; Pennsylvania Web site, http://www.state.pa.us/papower/cwp/view.asp?A=11&Q=467036 (accessed February 18, 2009).
31 PCS interview with Kienitz, December 9, 2008.
32 PCS interviews with Shuey, January 21, 2009 and Joe Pittman, chief of staff to Pennsylvania state Senator Don White, January 22, 2009.
33 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
34 Ibid.
35 Ibid. The upfront payment would have been reduced by the amount to pay the turnpike debt and would have been adjusted depending on the prevailing interest rate at the time the deal closed. Note that these calculations do not assume that the state would have had to pay for state police coverage of the turnpike over the 75 years of the lease.
36 Pennsylvania Turnpike Concession and Lease Agreement, www.dot.state.pa.us/internet/paturnpikelease.nsf/PATurnpikelease (accessed February 13, 2009).
37 Pennsylvania Turnpike press release, "Turnpike Issues Statement on Rendell Privatization Effort," April 16, 2008, http://www.paturnpike.com/news/2008/apr/nr041608.htm (accessed February 18, 2009).
38 Pennsylvania Turnpike Web site, http://www.paturnpike.com/i80/pdf/Lease_Summary.pdf (accessed February 18, 2009.
39 Pennsylvania Turnpike Web site, www.paturnpike.com (accessed February 18, 2009).
40 PCS interview with Pennsylvania state Representative Richard Geist, January 15, 2009.
41 "Bid to Lease Pennsylvania Turnpike Expires,"Pittsburgh Business Times, September 29, 2009. http://www.bizjournals.com/pittsburgh/stories/2008/09/29/daily24.html (accessed February 18, 2009).
42 "Federal Highway Administration Does Not Approve Pennsylvania's Plans to Toll Interstate 80," Federal Highway Administration, September 11, 2008. http://www.fhwa.dot.gov/pressroom/fhwa0820.htm (accessed February 10, 2009).
43 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
44 Michael Cooper, "House Plan for Infrastructure Disappoints Advocates of Major Projects," The New York Times, January 19, 2009, http://www.nytimes.com/2009/01/20/us/politics/20publicworks.html?_r=1 (accessed February 18, 2009).
45 PCS interviews with Geist, January 15, 2009; Harper, January 20, 2009; Markosek, July 26, 2008, and Shuey, January 21, 2009.
46 Eggers and Startup, Closing the Infrastructure Gap: The Role of Public-Private Partnerships, 11, http://www.deloitte.com/dtt/cda/doc/content/us_ps_PPPUS_final(1).pdf (accessed February 18, 2009).
47 U.S. Department of Transportation, Federal Highway Administration, "State PPP Legislation," http://www.fhwa.dot.gov/PPP/tools_state_legis_table.htm (accessed January 29, 2009).
48 Pennsylvania Transportation Funding and Reform Commission, Investing in Our Future: Addressing Pennsylvania's Transportation Funding Crisis, November 13, 2006, ES 8-9, ftp://ftp.dot.state.pa.us/public/pdf/TFRCFinalReport.pdf (accessed February 18, 2009).
49 Kienitz, testimony before the Pennsylvania House Transportation Committee, June 26, 2008.
50 PCS interview with Harper, January 20, 2009.
51 PCS interview with John Durbin, president, Durbin Associates, January 26, 2009.
52 United States Department of Transportation, An Update on the Burgeoning Private Sector Role in U.S. Highway and Transit Infrastructure, July 18, 2008, 59, http://www.ncppp.org/councilinstitutes/dotpppreport_20080718.pdf (accessed February 18, 2009). Tolls can be used to reflect the true cost of using a road system; by applying congestion pricing through peak and off-peak rates, tolling may actually have a positive effect on the level of overall congestion. A common concern related to long-term leases is that drivers will attempt to avoid paying tolls by taking alternative routes, thus shifting traffic to other roads. The U.S. Department of Transportation has reported, however, that if toll increases are pegged to inflation, they will not generally cause adverse traffic effects.
53 Ibid 63.
54 United States Government Accountability Office, More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest, February 2008, 8, http://www.gao.gov/products/GAO-08-1052T (accessed February 18, 2009).
55 Sven C. Hodges,"Toll Road Leasing Programs: Ready to Roll?" Law Journal Newsletters Equipment Leasing Newsletter, July 2007, 1, http://www.paulhastings.com/assets/publications/733.pdf?wt.mc_ID=733.pdf (accessed February 18, 2009).
56 United States Department of Transportation, Federal Highway Administration, Case Studies of Transportation Public-Private Partnerships in the United States, July 2007, 34.
57 Sujit M. CanagaRetna, Senior Fiscal Analyst, Southern Legislative Conference, Testimony before the Idaho Senate Task Force on Treasure Valley Transportation Issues (December 4, 2007). http://www.slcatlanta.org/Publications/EconDev/2007_Idaho_speech.html (accessed January 24, 2009).
58 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008. These reports included For Whom the Road Tolls: An Analysis of Financial and Strategic Alternatives for the Pennsylvania Turnpike, commissioned by the Democratic Caucus of the Pennsylvania House of Representatives (February 2008) and Leasing the Pennsylvania Turnpike, which Moody's Economy.com prepared for the Pennsylvania Senate Transportation Committee (October 2008). Additional reports were issued by organizations such as the Reason Foundation and the Commonwealth Foundation.
59 For Whom the Road Tolls: An Analysis of Financial and Strategic Alternatives for the Pennsylvania Turnpike, commissioned by the Democratic Caucus of the Pennsylvania House of Representatives, February 2008, 32-36. http://www.pahouse.com/docs/For%20Whom%20the%20Road%20Tolls%20Final%202-23-081_FINAL.pdf (accessed February 18, 2009).
60 Associated Press, "Turnpike Begins Layoffs as Buyout Periods Ends," Pittsburgh Tribune-Review, November 21, 2008. http://www.pittsburghlive.com/x/pittsburghtrib/news/breaking/s_599506.html (accessed February 18, 2009).
61 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
62 Kienitz, testimony before the Pennsylvania House Transportation Committee, June 26, 2008.
63 Pennsylvania Transportation Partners Web site, http://www.penntransportation.com/?sectionid=28 (accessed February 18, 2009); House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
64 PCS interview with Shuey, January 21, 2009.
65 PCS interview with Kienitz, December 9, 2008.
66 Sen. Roger Madigan press release, http://www.pasenategop.com/news/archived/2008/0408/madigan-041608.htm, April 16, 2008.
67 Transurban open letter, "RE: Pocahontas Parkway Association Public-Private Partnership" to the Virginia Department of Transportation, May 2, 2006, 1-8, http://www.virginiadot.org/news/resources/PocaPkwyAssocPubPrivPart.pdf (accessed February 18, 2009).
68 Germa Bel and John Foote, working paper, Comparison of Recent Toll Road Concession Transactions in the United States and France, November 2007. http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP 2007-11.pdf (accessed January 13, 2009).
69 A number of articles cite the factor of higher tolls in these deals, including Buxbaum and Ortiz, Bel and Foote, the Regional Plan Association and the NW Financial Group's papers, The Chicago Skyway Sale: An Analytical Review (May 1, 2006) and Then There Were Two…Indiana Toll Road vs. Chicago Skyway: An Analytical Review of Two Public/Private Partnerships: A Story of Courage and Lost Opportunity, November 1, 2006.
70 Calculation derived from data on concessionaire's Web site: http://www.macquarie.com.au/au/mig/asset_portfolio/traffic.htm
71 Although the Bureau of Economic Analysis defines the useful life of a highway at 45 years, in order to qualify as the "constructive owner," the length of a concessionaire's lease must significantly exceed the highway's useful life. As a result, the concessionaire can claim the tax benefits related to asset ownership and can spread the cost of the upfront payment over 15 years or across the life of the lease for tax purposes. Testimony by Edward D. Kleinbard, Chief of Staff, Joint Committee on Taxation, before the Subcommittee on Energy, Natural Resources, and Infrastructure Tax and Financing Aspects of Highway Public-Private Partnerships (June 24, 2008). http://finance.senate.gov/sitepages/hearing072408A.htm.
72 Regional Plan Association, Proceed With Caution: Ground Rules for a Public Private Partnership in New Jersey, January 8, 2007, 2, http://www.rpa.org/pdf/rpappp01082007.pdf (accessed February 18, 2009).
73 PCS interview with Rob Collins, managing director, infrastructure banking, Morgan Stanley, February 5, 2009.
74 2009 Supplemental Budget Information, Commonwealth of Pennsylvania State Employees' Retirement System, February 17, 2009, 32 http://www.sers.state.pa.us/sers/lib/sers/publications/budget_binder/budgetbinder2009.pdf (accessed February 27, 2009). Promises With a Price, Pew Center on the States, December 2007. http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/State_policy/pension_report.pdf; see supplemental fact sheets for the United States and each of the 50 states at http://www.pewtrusts.org/news_room_detail.aspx?id=32368 (accessed February 18, 2009).
75 Leasing the Pennsylvania Turnpike, Moody's Economy.com, October 2008, 53.
76 PCS interview with Pittman, January 22, 2009.
77 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.
78 Testimony by Richard C. Dreyfuss, senior fellow, Commonwealth Foundation; Matthew Brouillette, president and CEO, Commonwealth Foundation; Gary J. Gray, visiting professor of finance, Penn State University Park and Patrick J. Cusatis, associate professor of finance, Penn State Harrisburg, House Transportation Committee hearing on House Bill 2593, June 27, 2008.
79 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008, PCS interview with Harper, January 20, 2009.
80 See, for example, Sally Symanski, Colorado State Auditor, "Children's Basic Health Plan, Department of Health Care Policy and Financing, Performance Audit," May 2008, 4.
81 Allan V. Burman, Post-Award Contract Management: Who's Minding the Store, George Mason University and the IBM Center for the Business of Government, March 24, 2008, 2, http://www.businessofgovernment.org/pdfs/PostAwardContractManagement.pdf (accessed February 18, 2009).
82 United States Government Accountability Office, More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest, February 2008, 49-50, http://www.gao.gov/products/GAO-08-1052T (accessed February 18, 2009).
83 Ibid.
84 Giorgio Ragazzi, "Are highways best run by concessions? The Italian experience," World Transport Policy and Practice, 12, No. 2, 2006.
85 Auditor of Public Accounts, Commonwealth of Virginia "Agencies of the Secretary of Transportation: Report on Audit for the Year Ended June 30, 2006," 12.
86 House Transportation Committee hearings on House Bill 2593, June 26-27, 2008.